Company Contact: Investor Relations Contacts: Media Contact:
Rob Lewis, CFO David Barnard & Kirsten Chapman Chenoa Taitt
iMergent, Inc. Lippert/Heilshorn & Assoc. Lippert/Heilshorn & Assoc.
801.431.4695 415.433.3777 212.838.3777
investor_relations@imergentinc.com David@lhai-sf.com ctaitt@lhai.com
iMergent Reports Record Fiscal Third Quarter Revenue,
Pre-Tax Earnings and Cash Flows
- Revenue Increased 57% Compared to Third Quarter 2004-
-March 2005 Highest Revenue Month in Company History-
-Fiscal 2005 Annual Revenue Guidance Raised to
Approximately 40% Over Fiscal 2004-
- Earnings Before Taxes (EBT) Increased 159% Compared to Third Quarter 2004-
-EBT per Diluted Share Increased to $0.47-
-EPS per Diluted Share $0.31-
-Cash Flow from Operations During the Quarter of $5.1 Million -
OREM, Utah, April 28, 2005 - iMergent, Inc., (AMEX: IIG) a leading provider of
eCommerce and software for small businesses and entrepreneurs, announced its
results for the fiscal third quarter and nine-months ended March 31, 2005.
Total revenue for the fiscal third quarter 2005 ended March 31, 2005 rose 57
percent to $30.8 million from $19.6 million in the same quarter of fiscal 2004.
During the quarter, the company hosted 184 workshops, 32 of which were outside
the U.S., compared to the third quarter of 2004 when the company conducted 146
workshops, 8 of which were international.
Brandon Lewis, president and chief operating officer, said, "Sales execution
exceeded our expectations, with March delivering our highest revenue month in
the company's history. In the quarter, we balanced our marketing with a solid
mix of domestic and international workshops and continued to drive strong
financial results. Incremental sales to existing customers and high levels of
sales of ancillary products also contribute to these results, as our merchants
continue to recognize the value of our comprehensive solutions."
Lewis added, "At iMergent, we are constantly evaluating the products and
services offered to our customers to build on our competitive advantage in the
marketplace and to ensure the highest levels of customer satisfaction. In late
2004, we commissioned Dan Jones & Associates, a market research and public
opinion polling firm, to conduct nationwide telephone surveys of recent
StoresOnline(TM) customers about their experience with iMergent customer
service. This process validated our internal evaluation methods and our
customers' satisfaction. We remain firmly confident our platform and service
capabilities are the most compelling value in the marketplace."
Earnings before income taxes (EBT) for the fiscal third quarter 2005 increased
159 percent to $6.0 million from $2.3 million in the same quarter of 2004. EBT
per diluted share were $0.47 for the fiscal third quarter 2005, compared to
$0.19 for the fiscal third quarter of 2004. Net income for the fiscal third
quarter 2005 was $4.0 million, or $0.31 per diluted share, compared to net
income of $15.8 million, or $1.28 per diluted share, for the comparable quarter
of the prior fiscal year. During the fiscal third quarter of 2004, iMergent
recognized a $13.5 million non-cash income tax benefit based on the reversal of
the valuation allowance against its deferred tax asset, which consisted mainly
of net operating losses carried forward (NOL) from prior periods, effectively
eliminating a $14.1 million tax burden on future earnings.
Robert Lewis, chief financial officer, stated, "Building on the strength of our
previous quarter, we delivered increased cash flow from operations in the fiscal
third quarter 2005 of $5.1 million, our highest level ever, and our cash balance
rose to $12.2 million. We continue to leverage our business model and drive
efficiencies and productivity, as operating income as a percentage of revenue
increased to 16 percent for the quarter from 13 percent in the fiscal second
quarter 2005. Profitability was also boosted by an increase in gross margin as a
percent of revenue, which improved to 79 percent for the quarter compared to 73
percent in the fiscal second quarter 2005."
Revenue for the nine-months ended March 31, 2005 grew to $85.9 million versus
$56.1 million for the comparable period in 2004, an increase of 53 percent. EBT
for the nine-months ended March 31, 2005 increased 131 percent to $13.7 million
from $5.9 million in the same period of 2004. EBT per diluted share also rose to
$1.11 for the nine-months ended March 31, 2005, up from $0.49 for the comparable
period in fiscal 2004. Net income for the nine-months ended March 31, 2005
decreased to $8.8 million, or $0.71 per diluted share, compared to $19.4
million, or $1.61 per diluted share, for the comparable period in fiscal 2004,
which included a $13.5 million non-cash income tax benefit.
Don Danks, chairman and chief executive officer, stated, "Our sales teams
continue to execute well in all geographic regions and ongoing customer interest
and growth reinforces our confidence in the strength and value of our product
offerings. Earlier in April, we announced the successful results of our
workshops in the United Kingdom. As we continue to deepen our reach into the
global marketplace, while at the same time growing our domestic presence, we are
proactively working to gain a competitive advantage in new areas. For example,
during the quarter, we opened an office in Singapore to increase our strategic
presence in the international marketplace."
Recent Highlights
o Delivered $5.1 million in cash flow from operations in the
fiscal third quarter 2005.
o Held 18 StoresOnline workshops in the United Kingdom during
March that contributed $3.8 million in revenue.
o Held the first iMergent Analyst Day at the company's
headquarters in Orem on March 18th.
o Increased line of credit with JPMorgan Chase & Co. to $15
million.
o Recognized in the January 31st, 2005 edition of the Investor's
Business Daily (IBD) 100.
Danks added, "We remain confident in our outlook for the balance of fiscal 2005
and look forward to continued growth in the global eCommerce marketplace.
Internal growth remains strong, and substantial cash is being generated from
operations. In addition, we continue to evaluate opportunities to expand our
product and service offerings into new vertical markets as part of our long-term
growth strategy."
Outlook
- -------
Management raised its full year fiscal 2005 revenue growth outlook to around 40
percent over fiscal 2004. Previous outlook had been for 30 percent to 35 percent
revenue growth in fiscal 2005. In addition, positive operating leverage is
expected to continue with the annual pre-tax income growth rate to possibly
exceed the annual revenue growth rate. The future tax rate is anticipated to be
38 percent, with the majority of tax provisions being primarily non-cash.
Conference Call
- ---------------
Management will hold a conference call to discuss these results on Thursday,
April 28, 2005 at 4:30 p.m. ET, 1:30 p.m. PT. The conference call will be
broadcast live over the Internet at www.imergentinc.com. If you do not have
Internet access, the telephone dial-in number is 800-639-0297 for domestic
participants and 706-634-7417 for international participants. Please dial in
five to ten minutes prior to the beginning of the call at 1:30 p.m. PT (4:30
p.m. ET). A telephone replay will be available through May 2nd, 2005; dial
706-645-9291, and enter access code 5524366.
About iMergent
- --------------
iMergent provides eCommerce solutions to entrepreneurs and small businesses
enabling them to market and sell their business product or idea via the
Internet. Headquartered in Orem, Utah the company sells its proprietary
StoresOnline(TM) software and training services, helping users build a
successful Internet strategy to market products, accept online orders, analyze
marketing performance, and manage pricing and customers. In connection with
software, iMergent offers site development, web hosting, marketing and mentoring
products. iMergent typically reaches its target audience through a concentrated
direct marketing effort to fill Preview Sessions, in which a StoresOnline expert
reviews the product opportunities and costs. These sessions lead to a follow-up
Workshop Conference, where product and technology experts train potential users
on the software and encourage them to make purchases.
iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
Statements made in this press release that are not historical in nature
constitute forward-looking statements within the meaning of the Safe Harbor
Provision of the Private Securities Litigation Reform Act of 1995. Such
statements are based on the current expectations and beliefs of the management
of iMergent and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. Such risks and uncertainties include, without
limitation, the Company's continued ability to increase revenue; the future
success of workshops domestically and internationally; the ability to continue
to increase additional ancillary product revenue; the ability to increase
incremental sales to existing customers; the ability to build on our competitive
advantage in the marketplace and to ensure the highest levels of customer
satisfaction; the ability to maintain the success of our platform and service
capabilities; the ability to continue to increase cash flow and maintain or
increase our cash balance; the continued ability to leverage our business model
and drive efficiencies and productivity; the ability to maintain or increase
gross margins; the ability to maintain growth in the global eCommerce
marketplace; the continuation of substantial cash being generated from
operations; the ability to provide merchants services which grow their business;
the Company's ability to attract and retain key management and other personnel;
the results of Class Action suits filed; the company's resolution of the Texas
proceeding; employees complying with company policy and laws. For a more
detailed discussion of factors that affect iMergent's operating results, please
refer to its SEC reports including its most recent Form 10-K and Form 10-Q. The
company undertakes no obligation to update this forward-looking information.
-Tables to Follow -
IMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2005 June 30, 2004
-------------- -------------
Assets (Unaudited)
Current assets
Cash $ 12,232,593 $ 4,956,512
Trade receivables, net of allowance for doubtful accounts of
$11,246,980 at March 31, 2005 and $5,784,113 at June 30, 2004 17,975,508 12,427,366
Inventories 172,236 71,416
Prepaid expenses and other current assets 2,370,554 1,145,632
Deferred tax assets - current 6,631,690 3,714,732
Credit card reserves 287,854 596,556
------------ ------------
Total current assets 39,670,435 22,912,214
Property and equipment, net 505,822 524,427
Goodwill, net 455,177 455,177
Trade receivables, net of allowance for doubtful accounts of $6,271,293 at 9,308,747 6,515,102
March 31, 2005 and $3,167,216 at June 30, 2004
Deferred tax assets 6,814,069 9,406,523
Other assets 409,078 612,632
------------ ------------
Total Assets $ 57,163,328 $ 40,426,075
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 3,362,231 $ 2,849,632
Accrued expenses and other current liabilities 5,564,294 3,367,799
Income taxes payable 2,472,356 873,235
Deferred revenue 1,185,882 562,076
Line of credit 2,499,739 1,377,715
Current portion of capital lease obligations 87,777 56,682
------------ ------------
Total current liabilities 15,172,279 9,087,139
Capital lease obligations, net of current portion 101,904 201,053
Notes payable - 400,000
------------ ------------
Total liabilities 15,274,183 9,688,192
------------ ------------
Stockholders' equity
Capital stock, par value $.001 per share
Preferred stock - authorized 5,000,000 shares; none issued - -
Common stock - authorized 100,000,000 shares; issued and outstanding
12,124,172 and 11,536,258 shares, at March 31, 2005 and 12,125 11,537
June 30, 2004, respectively
Additional paid-in capital 75,713,501 73,330,600
Deferred compensation - (6,112)
Accumulated other comprehensive loss (4,902) (4,902)
Accumulated deficit (33,831,579) (42,593,240)
------------ ------------
Total stockholders' equity 41,889,145 30,737,883
------------ ------------
Total Liabilities and Stockholders' Equity $ 57,163,328 $ 40,426,075
============ ============
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Earnings for the
Three Months and the Nine Months Ended March 31, 2005 and 2004
Three Months Ended Nine Months Ended
-------------------------------- --------------------------------
March 31, 2005 March 31, 2004 March 31, 2005 March 31, 2004
-------------- -------------- -------------- --------------
Revenue $ 30,781,896 $ 19,564,954 $ 85,884,388 $ 56,060,551
Cost of revenue 6,553,940 4,059,290 21,659,728 12,966,772
------------ ------------ ------------ ------------
Gross profit 24,227,956 15,505,664 64,224,660 43,093,779
Operating expenses
Research and development 230,471 93,485 550,870 256,214
Selling and marketing 8,052,263 5,580,894 22,619,017 14,555,026
General and administrative 3,087,562 1,970,383 7,324,085 6,114,212
Bad debt expense 8,044,824 6,020,349 22,961,271 17,383,435
------------ ------------ ------------ ------------
Total operating expenses 19,415,120 13,665,111 53,455,243 38,308,887
------------ ------------ ------------ ------------
Earnings from operations 4,812,836 1,840,553 10,769,417 4,784,892
Other income (expense)
Other income, net 241,828 6,645 382,307 49,933
Interest income 937,660 468,661 2,593,619 1,110,418
Interest expense (22,221) (8,721) (77,967) (20,286)
------------ ------------ ------------ ------------
Total other income, net 1,157,267 466,585 2,897,959 1,140,065
------------ ------------ ------------ ------------
Earnings before income taxes 5,970,103 2,307,138 13,667,376 5,924,957
Income tax (provision) benefit (2,000,139) 13,515,081 (4,905,715) 13,515,081
------------ ------------ ------------ ------------
Net earnings $ 3,969,964 $ 15,822,219 $ 8,761,661 $ 19,440,038
============ ============ ============ ============
Earnings per share:
Basic $ 0.33 $ 1.39 $ 0.75 $ 1.72
Diluted $ 0.31 $ 1.28 $ 0.71 $ 1.61
Weighted average shares
outstanding:
Basic 11,965,993 11,368,868 11,738,149 11,275,086
Diluted 12,654,448 12,353,626 12,327,647 12,111,583
IMERGENT, INC. AND SUBSIDIARIES
Earnings Before Income Taxes Per Share Calculation
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
March 31, 2005 March 31, 2004 March 31, 2005 March 31, 2004
-------------- -------------- -------------- --------------
Earnings before income taxes (EBT) $ 5,970,103 $ 2,307,138 $ 13,667,376 $ 5,924,957
Basic EBT per Share:
Basic $ 0.50 $ 0.20 $ 1.16 $ 0.53
Diluted $ 0.47 $ 0.19 $ 1.11 $ 0.49
Weighted average shares outstanding:
Basic 11,965,993 11,368,868 11,738,149 11,275,086
Diluted 12,654,448 12,353,626 12,327,647 12,111,583